Business

We have closely followed the work of SocGen's under-appreciated Albert Edwards and Andrew Lapthorne for years for one simple reason: they have been right all along, however as a result of ever more aggressive and extensive central bank interventions, the mean reversion that should have happened years ago, keeps getting postponed, assuring that when it does finally happen the outcome will be epic. That time may be approaching.

Curious who else got slammed in Friday's junk bond debacle? The answer - everyone's favorite CNBC commentator, "world renowned commodity trader" Dennis Gartman. From his latest letter:

Small doors, large crowds. Amid yet more liquidations (Brazilian Bank BTG flushing its European credit exposure and Lucidus US HY fund), the large high-yield bond ETFs are tumbling in pre-market as two years worth of under-water easy-money trend-followers head for the exits from the "highly liquid" ETFs.. . and crush what little liquidity there is in the underlying. When will The Fed step in and buy US HY debt to stymie "fire-sale" prices?

This will be the 8th drop in the last 9 days...

As MacroMan noted earlier,

Earlier today, a third HY domino fell as the $900 million Lucidus Capital Partners announced that after an October redemption request by a “significant investor,” the fund has liquidated and will return money to investors. 

If you’re a Lucidus investor or counterparty, CEO Christon Burrows “thanks you for your support.”

The Lucidus liquidation comes on the heels of last week’s news that Third Avenue and Stone Lion Capital have suspended redemptions in a (likely futile) attempt to avoid going down in history as the guys who started the HY firesale. 

• Oil prices drop towards 11-year lows on worsening glut (Reuters)
• Third Avenue Seen by Top Investors as Fueling More Carnage (BBG)
• Lucidus Has Liquidated $900 Million Credit Funds, Plans to Shut (BBG)
• Investor nerves tested with yuan, oil, Fed in play (Reuters)
• Junk Bonds Stagger as Funds Flee (WSJ)
• Seattle lawmakers set to vote on allowing Uber, other drivers to unionize (Reuters)
• The Mystery of Missing Inflation Weighs on Fed Rate Move (WSJ)
• Trump’s Rise Enabled by Decades-Long Slide for the Middle Class (BBG)